As one of the four major drivers of change, the aging farmer demographic offers numerous opportunities for young farmers. The challenge lies in the two generations working in an orderly manner to pass on knowledge, experience, management skills and assets. Only then can we maximize the older proven talent to build stronger farm operations.
For those willing to collaborate, think outside the box and take a few calculated risks, those opportunities multiply, even in tough times, says Ron Farrell of Farrell Growth Group. While he has said good times teach only bad lessons, I would add bad times provide opportunities to learn.
In my experience, change only happens when our back is against the wall and we’re either going to change or fail. How many of us have made meaningful changes to our business during good times?
While crop production margins are disappointing right now, there are key leverage points that can sharpen our focus, reduce stress and make farming easier and more enjoyable.
The first is marketing, specifically selling your crops in the top third of the market. Then comes machinery and labor costs per acre and agronomic management.
You might say, well, show me the money. When someone asked Jesse James why he robbed banks, he said, heck, that’s where the money is.
Here is a summary of what could result in additional profit opportunities during gloomy crop production times.
- If you can capture another 50¢ per bushel in corn that could result in about $100 per acre profit.
- The average machinery cost per acre in our database is $126. The range spans from $44 to $466. Machinery cost per acre can be too low if it effects the bottom line because of timeliness and quality. If you could hit the top 10%, you could gain another $67 per acre.
- When it comes to labor cost per acre, our database average is $51, and the range is $9 to $128. How is $9 possible? To calculate labor cost per acre, we total operator draw and hired labor and divide by harvested acres. If your spouse is a pharmacist, it adds to the competitive advantage of the farm operation. Getting in the top 10% saves another $27 per acre.
- Precision farming, based on our client data, adds 7 bu. to 12 bu. of corn per acre. At $4 per bushel that’s another $38.
It’s impossible to run an “A” game in all aspects of financial management. In my observations, though, farmers who focus on these four areas add at least $100 per acre to their bottom line. This is where age and experience can be valuable. The senior generation has lived through and survived crop cycles. Many in the younger generation only know farming with $7 corn.
More than 30% of all farm operators are at least 65 years old, which is three times the number of nonagricultural workers in that age demographic. Nearly 20% of the principal operators of midsize, large and very large farms also fit in the “65 and older” category.